Big-thinking developer thinking bigger

KSL seeks to double hotel-condo project

ENCINITAS 
A developer who secured permits to build a luxury condo-hotel on the oceanfront cliffs of northern Encinitas and later acquired adjoining property will ask the city for approval to double the size of the planned resort.

The site, at the northern gateway to Encinitas, commands sweeping views of South Carlsbad State Beach and Batiquitos Lagoon. It is south of La Costa Avenue and west of North Coast Highway 101.

KSL Resorts' original plans, approved in 2006 by the California Coastal Commission, called for 130 hotel units, some of which would be sold to investors through a condominium-type financing arrangement but operated as part of the hotel. The company also planned to build a restaurant, spa, pool, underground garage and meeting rooms on 4.3 acres.

But in 2007, KSL bought 3 acres to the south, including the hilltop land under the old Davina's Cabo Grill & Cantina, for $5 million, according to county property records.

Chevis Hosea, KSL's vice president for land and commercial development, said that with a total of 7.3 acres, the resort could be double the size. Company officials are contemplating 200 to 250 rooms, with a second restaurant and retail boutiques, he said.

“This would be a signature property not only for Encinitas, but for the county,” Hosea said. “The new site gives us something to expand the amenity base for the hotel.”

Hosea said the $200 million hotel would be a five-star property similar to the Montage Laguna Beach, Shutters on the Beach in Santa Monica and La Valencia Hotel in La Jolla.

KSL owns several hotels, including La Costa Resort and Spa in Carlsbad and the Hotel del Coronado.

Before anything can happen, the company will need to obtain permits for a larger hotel. KSL is working on a design concept, engineering and architectural work, and plans to apply for coastal development permits through the city of Encinitas.

“We're in the building-design phase now,” Hosea said. “Soon, we'll be talking to the city to get input. Around mid-2009 we'll submit a formal application to the city of Encinitas for our entire project.”

Encinitas Planning Director Patrick Murphy said KSL officials contacted him when they bought the nearby land, but he hasn't heard any details about the expansion idea.

“It was encouraging to us when they told us they'd acquired more land,” Murphy said. “We felt it would be a real benefit for the commercial corridor – the Highway 101 – in Leucadia.”

Encinitas Mayor Maggie Houlihan said that when the application is submitted, city officials will carefully consider subjects that arose during the first permit hearings – such as public access to the beach, the viability of condo-hotel financing, traffic and the environment.

“I think it's important that we consider all issues that came up before and make sure that we cover all our bases,” Houlihan said.

KSL Resorts is managing the development project on behalf of its owners: investment banking firm Goldman Sachs and KSL Capital, Hosea said.

When the Coastal Commission approved the original plans, it set restrictions to ensure that the beachfront hotel rooms would be available to the public. One rule is that condo buyers will be able to occupy their units for no more than 90 days each year.